Friday, 22 February 2013

How London tied publican

Here's a fascinating collision between beer history and normal history, through the medium of a stroppy landlord.

A short explanation of the context. The Liberal government of the day had had several run-ins with the House of Lords, the culmination of which was the rejection of the 1909 Budget (the Finance Bill). This caused a constitutional crisis, a new election and eventually a limitation of the power of the House of Lords.

One of the provisions of the rejected Finance Bill was an increase in beer duty. It seems that breweries had jumped the gun and increased their prices before the law came into effect.  The Bill was passed in 1910, but I'm not sure that the increase in beer tax was included. The figures I have don't show it increasing between 1901 and 1915.

Brewers and Their Covenant.

In the Chancery Division to-day Messrs Courage, the well-known brewers, sought injunction to restrain George Andrew Carpenter, a Deptford publican, from selling beer not supplied by them in breach of the covenant of his lease. The case arose out of the action of the London brewers in increasing the price of beer six shillings per barrel in view of the Finance Bill. The defendant, who declared that the increase was out of all proportion to the Budget burdens, refused to pay the new price, and was able to undersell the neighbouring houses. He further held that plaintiffs having broken their covenant to supply him with beer at fair prices he was under no obligation to take their beer.

Mr. Jenkins, for the plaintiffs, said the consumer was charged at the rate of twelve shillings per barrel of 36 gallons. There were very few brewers who did not come in and the rise was accepted by the retail trade without protest. There was reason at that time to suppose the Finance Bill would not become law, and the brewers had to consider their position.

Answering Mr Justice Nevelle who asked if brewers paid duty on an undertaking like some Other trades, Mr. Hemmerde, for the defence, said they Had not paid at all.

Mr Jenkins said they had not been asked when they found there was a probability of the Lords rejecting the Bill. They took the increase off in anticipation. Had they Known July that it would be rejected the price of beer would probably never been raised.

The Court, said Jenkins, had not concern with the rights the public in this case. The question was whether the extra charge of six shillings in the case of a tied house was a reasonable charge, and whether it would make up for the decrease in consumption.

Mr. Cecil Lubbock, managing director of Whitbreads, and a director of the Bank of England, was then called. The scheme under which the price was increased, he said, was considered the best means of meeting the increased taxation, and saving the shareholders. Whilst the increased price prevailed the decreased consumption amounted to from ten to fifteen per cent. Had the proposed new duties been imposed, the price beer would have been increased to brewers by half-a-crown per barrel, affecting witnesses' company by about £50,000 to £60,000 a year. He considered the increase to the tenant a fair and reasonable one.

Answering Mr Hemmerde, witness said he knew of no case in which a tied tenant had been refunded the six shillings per barrel on the saloon bar trade on condition that he raised the charges to the poorer classes for London porter and mild ale. In the case of free houses the tenants might have been so refunded. The whole of the taxation on beer until this year had been borne by the brewers. It was true there had been a certain weakening the article supplied, but the public taste had tended towards a lighter ale. (Proceeding.)"
Evening Telegraph - Thursday 16 December 1909, page 3.

I'm confused as to the size of the tax increase. The tax had been 7s 9d per 36-gallon barrel. It sounds like the brewery charged an extra 6s per barrel and expected the retail price to increase by 12s a barrel. The 12s equates to a 0.5d per pint increase, which is probably why that figure was chosen. The smallest coin was a farthing (a quarter of a penny), so a halfpenny a pint was the smallest possible increase that would leave the price of a half pint payable with existing coins.

Hang on, it says the tax increse to the brewer was a half crown, or 2s 6d. That's quite a jump in the tax, almost a third. 

Nice to see one of the Whitbreads taking the stand. That he was also a director of the Bank of England demonstrates the standing of the large London brewers. It;s no surprise that he thought the price increase was reasonable. He was a brewer, after all.

Of course, they were never going to let a landlord get away with buying beer outside the tie. That would have destroyed the whole basis of their business, which by this date was very dependent on the captive market provided by tied houses.

1 comment:

Martyn Cornell said...

If I recall (I'm away from my sources) the government increased the cost of a pub licence instead, to try to make up the revenue they would have got by increasing beer taxes, but in a classic example of the law of unintended consequences, the brewers were able to get the local authority rates on their pubs reduced, because the values of those pubs were now lower as the cost of a licence was now higher - meaning that overall their costs, and the total tax/rate take, ended up much the same.